How to find the best renters insurance

July 07, 2011

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WRITTEN BY: Elliot Crumpley

Moving into a new apartment makes you realize just how expensive living on your own can be. On top of the hefty security deposit and first month’s rent, you will most likely have to purchase other big, expensive items: a microwave, TV, DVD player, a bed, a dresser, couches, tables, etc. This makes your apartment far more valuable, everything more difficult to replace on a whim and, thus, more attractive to burglars. This is why understanding the process of how to find the best renters insurance is extremely important and could maintain your financial health in the case of the unexpected.

Think it can’t happen to you? The FBI estimates that every 15 seconds a property becomes the victim of a break-in. Add to that the likelihood of a forgetful neighbor leaving a lit cigarette unattended or a bathtub overflowing, and the risk of your possessions being stolen or damaged by fire or flood increases exponentially. A part of living independently is protecting yourself and your possessions. By knowing how to find the best renters insurance, you can save yourself a lot of anxiety, headaches, and, most of all, a lot of money.

“Most renters don’t realize what it would actually cost to replace all of their clothing, furniture, electronics, small appliances and other items,” says Brad Cooper, Senior Vice President of Operations for Insweb, an online insurance marketplace. “A total loss from a fire could result in the student needing to replace thousands or likely tens of thousands of dollars worth of possessions.”

Fortunately there is such a thing as renters insurance which can protect your possessions from any of these events. Unlike other insurance policies, renters insurance is cheap, simple, and covers a broad array of situations. How to find the best renters insurance, surprisingly, is a relatively straight-forward process.

The first step to take if you’re concerned with how to find the best renters insurance is to take an inventory of all your possessions.

“Imagine if all that you owned that allowed you to move through your day-to-day life, perished in a fire,” says Linda Rey of the Rey Insurance Agency in New York. “When you graduate from college, you may have a better understanding of this because you may have to buy new clothes for work, furniture, appliances, etc. Keep those receipts.”

Receipts, however, aren’t the only evidence you need. “Take photos or video of the rooms of your apartment. This will help to determine a value on lost items in the event of a fire,” advises Rey. Walk around your apartment explaining each item you wish to insure. Keep all of your receipts for your bigger items and a copy of this evidence for yourself and in another safe location – either with a friend or in your car. This is a vital step in how to find the best renters insurance as it is evidence of your possessions if you have to file a claim.

“There are a lot of things students can do to save money on renters insurance. First, some insurers simply offer discounts to full-time students,” says Cooper. “Another common discount is when the student has his or her auto and renters insurance with the same company” who can offer a discount of up to 10% on each policy. Furthermore, you can lower monthly payments by proving you have sufficient security- like an anti-theft device or a deadbolt. Your credit score will also influence your quest in how to find the best renters insurance.

When thinking about how to find the best renter’s insurance, pay close attention to the fine print. Typically, renters insurance comes with two options: actual cash value (ACV) and replacement cost. ACV means that when you make a claim to replace lost, stolen, or damaged items, the insurance will cover the value of that item at the time of the claim. If you bought a television for $500 two years ago, chances are that it has decreased significantly in value since then, even though you might have to shell out $500 for a replacement.

Replacement cost means that the company will replace the exact item. Because this policy comes at a higher cost to the insurance company, you will have higher monthly payments. Important aspects in how to find the best renters insurance comes with assessing your items, their current worth, and what you can afford monthly.

Renters insurance also covers more than what most people would assume. There are other, surprising benefits to know about when planning how to find the best renters insurance. Are you prone to playing host to friends? What happens when one of them trips and lands on their face? If they incurred medical fees because of the incident, you could be sued. Because the incident took place in your apartment, renters insurance would cover not only your (ex-) friend’s medical fees but also your legal costs. Otherwise, you’re stuck with an upsettingly high bill because your friend is ditzy.

Another important reason students should know how to find the best renters insurance is because your landlord’s insurance only covers the building’s physical structure. Their policy will not cover your personal items which are ultimately your responsibility. A pipe burst, sending gallons of water into your apartment, soaking your television, computer, and sending your cat into a maniacal frenzy who destroying your couch. The landlord’s insurance will cover the physical damage (as in the carpet-replacement cost) but not to your items.

Renters insurance will cover not only all of your damaged items but, if your current apartment becomes uninhabitable, all of your hotel fees, restaurant costs, and necessary items to tide you over until you can return home. This can be a lifesaver and should not be ignored when figuring out how to find the best renters insurance.

Renters insurance will also cover your items if they’re not even in the apartment. “Renters insurance covers almost all items owned by the student and kept on the premises, and often covers personal items you carry with you when you travel as well,” says Cooper.

Independent insurance agents will also help you with how to find the best renters insurance. “Call an independent agent who can shop your insurance among multiple carriers to see which carrier can provide affordable coverage based on your specific needs” says Rey. Speaking with an independent agent will also help you figure out how to find the best renters insurance by explaining to you what kinds of items might be excluded.

“Renters insurance does not protect students from…some disasters that will be clearly spelled out in the policy (nor) cars, boats or other vehicles kept on the premises,” says Cooper. “There may be other exclusions as well—it’s very important to carefully review any policy before purchase.”

Navigating the various lenders can be daunting, but understanding how to find the best renters insurance will help when deciding how to approach one of the most important investments a college student can make.